Segmentation, Targeting,

and Positioning
Professor Lawrence Feick
University of Pittsburgh
 Outline
Definitions
Segmentation and Targeting
segmentation bases
criteria
Positioning
definition and uses
perceptual maps
Summary
 Definitions: markets
Market
people or organizations with the willingness, ability,
and authority to buy a product
Target market
people or organizations to whom a particular
marketing mix is aimed
Segmentation
dividing a heterogeneous market into homogeneous
submarkets
Definitions: targeting approaches
Mass market (undifferentiated marketing)
Segmentation
focus (concentrated marketing, niche
marketing)
multi-segment (differentiated marketing)
 Segmentation questions
Segmentation
dividing a heterogeneous market into
homogeneous submarkets
Questions:
heterogeneous on what?
on what basis to divide?
how finely to divide?
 Segmentation bases
Segmentation base: the variable or variables
on which the market is divided
A good segmentation base should:
yield differences in product behavior
give insight into why consumers buy
help guide marketing mix decisions
 Types of segmentation bases
Independent of product category
demographic characteristics
geographic characteristics
psychographic/AIO characteristics
Product category related
benefits sought/needs met
product usage, brand loyalty, price sensitivity
 Examples of demo/geo-graphics
Age
Income
Education
Marital status
Family lifecycle
Region of country
Ebony, June 1998
Family Circle, June 1998
 Proprietary geodemographic
segmentation solutions
Census data updated and augmented with
purchases, subscriptions, auto registrations
Group (cluster) geographic regions that are
similar: often zip code-based
Uses: direct mail, media buys, site location
Eg: PRIZM from Claritas. Check it out:
http://www.claritas.com/prizm.htm
 Examples of psychographics
Activities
work, hobbies, social events, vacation, clubs
Interests
family, home, job, community, fashion, food
Opinions
self, politics, social issues, business, culture
Lifestyle
VALS2 groups
 What is your VALS 2 type?
Typical questions:
I follow the latest trends in fashion
I would rather make something than buy it
I would like to spend a year or more in a
foreign country
Check it out at:
http://future.sri.com/vals/survey.html
 Examples of benefits sought
Toothpaste
cavity prevention, whiteness, fresh breath
Cake mix
ease of preparation, cost, taste, uniqueness
Cameras
ease of use, technical features, compactness
Redbook, July 1998
 Examples of product-related
segmentation
Product usage: nonusers, light users, heavy
users
e.g., beer, soft drinks, movie renters
Brand loyalty: loyals and switchers
e.g., laundry detergent, coffee
Price sensitive v. price insensitive
 Selecting segments
Segment size
Segment growth and growth potential
Present and future competition
Consumer purchase ability and likelihood
Reachability
 Positioning
Usage is sloppy- often combining a brands
position with the marketers actions to create
the position
Position: brand meaning perceived by the
target market in terms of
other, competing products
perceived product characteristics, features
How the manufacturer sees the
product
 Manufacturers view
It is made from a durable alloy
It is sold through independent dealers
It has a three year warranty
It is the best we have ever produced
How the customer sees the
product
 Target markets view
It looks really good and seems sturdier than
brand x or y
Can it fit in my apartment?
Would people like me buy one?
 Positioning matters!
Virginia Slims
Acura, Lexus, Infiniti
Vodka
 What affects a products
position?
Product: design, features, style, packaging,
warranty
Price: price level, discounts
Promotion: message, media, sales
promotion, publicity
Distribution: exclusivity of coverage, types
of retailer
 Issues in positioning
What/how many characteristics do
consumers use to distinguish products?
Where are existing products located with
respect to these characteristics?
Where is an ideal product located?
 Perceptual mapping
Statistical tools used to locate products in
terms of perceived characteristics
Interpretation:
Products closer together are perceived as
similar
Similarity relates to competitiveness
Can also plot ideal points
 Perceptual maps: examples
Pain reliever map (text page 251)
US auto industry circa 1985
 Perceptual map of the US auto
market circa 1985
Classy, prestigious, distinctive

Mercedes-Benz
Cadillac
Porsche

BMW
Chrysler
Buick
Conservative, Oldsmobile Pontiac Sporty, youth
older appeal oriented,
Chevrolet
performance
Datsun
Toyota

Dodge

Volkswagen

Practical, inexpensive to
own and operate
 Questions
What is the most likely competitor for
Cadillac?
Would a GM manager be happy about
Buick and Oldsmobile?
How is VW perceived in the US in 1998
compared to the mid 1980s?
Reprise: segmentation, targeting,
and positioning
Benefits:
focus on meeting customer needs, wards off
competition, and helps anticipate changes
increases focus on longer term relationship
Costs
segments foregone
Issues
Colt 45, Joe Camel